Is Refinancing Worth the Cost?
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Searching for a loan? We'd be thrilled to answer your questions about our many mortgage solutions! Call us at (207) 571-8034. Ready to get started? Apply Now.
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Ever hear the old rule of thumb that says you should only consider refinancing if the new interest rate is at least 2 points under your current rate? Perhaps several years ago that was good advice, but as refinance costs have been falling recently, it could be a good time to look into it. A refinanced mortgage is often worth its cost many times over, considering the benefits that can come, in addition to a reduced interest rate.
Benefits from Refinancing
You might be able to bring down your interest rate (sometimes significantly) and reduce your monthly payment amount with your refinanced loan. Additionally, you could be given the option of pulling out some of the equity in your house by "cashing out" some funds to renovate your home, consolidate debt, or plan a special vacation. With lower rates, you might also be able to build up home equity faster by switching to a shorter term mortgage loan.
Expenses and Fees
Of course, you will have some fees and expenses during your the refinance process. With your refinance, you are paying for a lot of the same things you paid for at the time you obtained your original mortgage. Included in your costs will probably be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other fees.
Do the Math
You might offer to pay points (prepaid interest) to get a better rate of interest. The amount you will save on the life of the loan could be significant if you've paid up front about three percent of the new loan total. We recommend that you consult a tax professional before acting on rumors that any paid points can be deducted on your taxes.
One more cost that a borrower may consider is that a reduced interest rate will reduce the interest amount you will deduct from your taxes. We can help you do the math! Call us at (207) 571-8034.
Most people find that the monthly savings quickly outweigh the up-front expenses of refinancing. We can help you explore what your options are, considering the effect a refinance might have on your taxes, if you are likely to sell your home in the near future, and your available cash. Call us at (207) 571-8034 to get started.
Want to know more about refinancing? Give us a call at (207) 571-8034.